Situations arise where a hot startup receives a round of funding or is offered tempting cash deal for a buyout. While this can work, this…
Situations arise where a hot startup receives a round of funding or is offered tempting cash deal for a buyout. While this can work, this quick-to-close-a-deal model always best when it comes to startups, according to Michael Lagoni of Stackline.
Investing in startups is big businesses. Speaking with Digital Journal Michael Lagoni, founder and CEO, Stackline discussed what companies can gain when they avoid the temptation of low hanging fruit? He explains there are benefits to playing the long game when getting off the ground.
Digital Journal: What are the main challenges faced by start-ups?
Michael Lagoni: The challenges we face as start-up leaders tend to fall into three buckets: product, talent, and capital. If you find great early success with any two of those you can propel a start-up through its first two years, but to have any kind of longevity, you need to be secure in all three.
Developing a successful product starts with the hunt for latent demand. Gather evidence that your idea addresses a customer need, nurture its differentiated strengths, and anticipate the preferences of customers. (Easy, right?) We are fortunate at Stackline to be on the vanguard of some of the most important cross-industry trends of our time; the value of the e-commerce channel for brands and manufacturers has been surging, and we found product-market fit early by building expertise and a best-in-class data engine at the center of digital advertising and e-commerce sales.
But that initial product-market fit is only part of the success equation. To scale, you need the right talent, at the right moments, in the right roles. That’s why successful founders often spend a disproportionate amount of their time involved in the hiring process. They’re uniquely positioned to define the complementary skill sets and personalities the team will need in order to execute through the next phase of growth.
Financing is the third major challenge, and the pressure is as acute at a seed stage when an entrepreneur needs to prototype a first product as it is four years in, when the CEO needs to 3x headcount. In a VC-flush startup environment, it can be tempting to plunge into product development and hiring without much foresight about how ideas will move from whiteboard to sustainable line of business. But I think some reverence for sound business fundamentals is healthy. Having a path to profitability from day one can give you a lot more freedom to make the decisions that are right for the long-term health of the business.
DJ: What are the advantages and disadvantages of start-ups seeking investment funding early?
Lagoni: As bootstrappers ourselves, we see a lot of upside in standing up revenue streams early and giving your business the ability to fund its own growth.
